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November 1, 2013

Morgan Stanley Launches Sustainable Investing Group With $10B Target

The bank also pledges $1 billion in housing investments and sets up a fellowship program to help grow the initiative

Morgan Stanley CEO James Gorman. (Photo: AP)

Morgan Stanley (MS) said Friday it was setting up the Morgan Stanley Institute for Sustainable Investing, hoping to attract $10 billion in assets to the group over the next five years.

The new organization plans to create financial products and portfolios in coordination with Morgan Stanley Investment Management’s long-only and alternative investment partners businesses − in which “positive social and/or environmental impact is a core part of the underlying investment strategy,” the company says.

“Morgan Stanley is in a unique position to harness the capital markets to help address the most pressing challenges facing society today, connecting governments, investors and businesses with the capital to execute at scale,” Morgan Stanley Chairman & CEO James Gorman said during a speech at the Columbia Business School in New York, where the bank is setting up a sustainability-focused fellowship program.

“Our philosophy is clear–the most effective solutions to sustainability challenges are those that can be brought to scale,” Gorman explained. “Our clients are increasingly turning their attention to what it takes to secure the lasting and safe supplies of food, energy, water and shelter necessary for sustainable prosperity.”

Gorman will chair the institute’s advisory board, which will be led by Audrey Choi, currently head of Morgan Stanley’s Global Sustainable Finance group. Other board members include Bob Aiken of Feeding America, David Gergen of Harvard’s Kennedy School of Government and former Wall Street Journal publisher Karen Elliott House.

“As the world’s population grows toward 9 billion and beyond, meeting the exponentially growing needs for quality education, health care, housing and security will far outstrip current models of business, government or philanthropy,” said Choi, in a press release.

“The Morgan Stanley Institute for Sustainable Investing is committed to playing a catalytic role in forging innovative cross-sector partnerships that develop solutions to mobilize capital efficiently and effectively to meet these challenges at scale,” she said.

The institute plans to invest $1 billion in a sustainable-communities initiative to provide access to capital for the preservation and enhancement of affordable housing units at risk of deteriorating or becoming unaffordable for low- and moderate-income households. It will work with the Local Initiatives Support Corp. and NCB Capital Impact on this project.

“This program takes our long partnership with Morgan Stanley to a new level,” said Michael Rubinger, president and CEO of LISC, in a statement. “It doesn’t just finance buildings; it fuels opportunity and focuses on quality of life. Together, we will be able to help low-income families live better and make their communities stronger and healthier.”